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ALEXANDRIA, Va.-Federal credit unions’ lending and incidental powers authorities permit federal credit unions to facilitate certain functions of a city loan program. NCUA Associate General Counsel Sheila Albin wrote in a recent legal opinion letter that federal credit unions may aid a city government loan program by reviewing members’ applications, and if they do not pass the credit union’s muster, passing them on to the city program and verifying application information. According to Eric North, Esq., of the North Law Firm in San Jose, Calif., a city has created a loan program to help residents make required building renovations. The city identifies qualified residents and directs them to the credit union to initiate the loan approval process; credit union members’ applications are submitted to the institution for review. The federal credit union may make the loan if the member qualifies, but if not the credit union reviews the application according to the city’s loan standards and forwards the application and findings to the city. The federal credit union will review only members’ applications and receive $250 per application reviewed. Albin concluded that the Federal Credit Union Act permits institutions to make renovation loans and that the federal credit union may help members obtain loans from the city under the finder authority found in the incidental powers rule, as well as earn income from that activity.

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